Chaswood Resources unit enters franchise agreements

CHASWOOD Resources Holdings' subsidiary Bistro Italiana has entered into development agreements with five companies that will develop and operate Chaswood's Italiannies brand of restaurants in Malaysia, where Chaswood is based, and overseas.

Chaswood said on Sunday that this is part of its plan to expand the existing business in Malaysia and internationally more quickly using a franchise business model, which had also been used for the group's previous business and brand.

One of the five agreements is with Tremendous Experience Sdn Bhd, which will open five Italiannies outlets in Johor and Singapore in three years.

Another agreement is with Monz Investments Ltd, which is expected to open five outlets in China, excluding Beijing, in six years.

A third company, Debut Supreme Capital Sdn Bhd, will open three outlets in Beijing in three years.

Within Malaysia, Be Urban Group Sdn Bhd will open seven outlets in Klang Valley in five years. EMS Discoveria Sdn Bhd will open three outlets in Penang and Ipoh in three years.

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The agreement with EMS Discoveria is deemed an interested party transaction as Chaswood's controlling shareholder Lim Chih Li is a director and has indirect interest of 37 per cent in the ultimate holding company of EMS Discoveria.

However, the aggregate value of the transaction is RM150,000 (S$49,000) which is below S$100,000.

Also, it is about 0.2 per cent of the group's latest audited net tangible asset on an absolute basis for the financial year ended Dec 31, 2019, and about 2.2 per cent of the group's market capitalisation as at June 15, 2018, being the last trading day prior to its suspension on June 18, 2018. Both are below the relevant threshold of 3 per cent.

Therefore, the transaction does not require an immediate announcement or be subject to shareholders' approval.

In all, the agreements contributed a cumulative development fee income of RM1.05 million, which has a positive impact to the consolidated earnings per share and the consolidated net tangible assets per share of the company for the financial year ended Dec 31, 2020.

An income of RM500,000 was also recorded for the financial year ended Dec 31, 2019 due to the execution of the agreement with Monz Investments.